Department of Accountancyhttp://hdl.handle.net/11602/19492024-03-29T09:52:02Z2024-03-29T09:52:02ZBasel III regulatory requirements and the performance efficiency and capital structure of selected listed African banksObadire, Ayodeji Michaelhttp://hdl.handle.net/11602/23392023-05-02T08:24:32Z2022-11-10T00:00:00ZBasel III regulatory requirements and the performance efficiency and capital structure of selected listed African banks
Obadire, Ayodeji Michael
This study examined the impact of Basel III regulatory requirements on the financial performance, stability, efficiency, capital structure and risk-taking behaviour of selected listed African banks. The research hypotheses were formulated and tested using the Blundell and Bond system of Generalised Methods of Moment (GMM), pooled Ordinary Least Squares (OLS), Random Effects (RE), and Fixed Effects (FE) estimators. The study further used a panel data of 45 listed banks from six African countries that had adopted the Basel III Accord for the period 2010 to 2019.
The system GMM estimator was used to estimate the impact of the Basel III regulatory requirements on the capital structure decisions of the selected African banks. Robustness tests were performed by using the two-step Blundell and Bond system GMM procedure. The robust results showed that the selected African banks were highly leveraged with a positive relationship between the Basel III minimum capital requirement, capital adequacy ratio, capital buffer premium and the bank leverage measured by the ratio of Tier 1 capital to total exposure. Furthermore, the study revealed that the bank specific capital structure determinant such as the bank size, asset tangibility and profitability had a significant and positive impact on African banks’ observed leverage and were important determinants of the discretionary capital. The trade-off, pecking order and agency cost theories were the three underpinning capital structure theories that complimentarily explained the financing behaviours of the selected African banks.
Furthermore, the study used the pooled OLS, FE and RE estimators where appropriate to fit the models testing the impact of Basel III regulatory requirements on the financial performance, stability, efficiency and risk-taking behaviour of the selected African banks. Robustness tests were performed by conducting diagnostics tests such as the F- test, Breusch and Pagan test and the Hausman specification test. These tests were conducted to select the appropriate estimator amongst the pooled OLS, FE and RE estimators. To test the banks’ financial performance, the RE and FE estimators were used to fit the ROE and ROA models respectively whilst the pooled OLS estimator was used to fit the banks stability model. Moreover, to test the banks’ efficiency,
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the pooled OLS and RE estimators were used to fit the NIMR and OETA models respectively, whilst the RE estimator was used to fit the banks’ risk-taking behaviour models. Furthermore, the study showed that the capital adequacy ratio had a significant positive effect on the financial performance of the selected African banks, whilst the liquidity requirement was positively correlated to bank stability. In addition, the capital buffer premium had a significant positive impact on both measures of bank efficiency, whilst the liquidity requirements showed a more significant impact, and was consistent across all the three measures of the risk-taking behaviour of the selected African bank.
The current study contributes to the body of knowledge in eight significant ways and most importantly proposes an optimum model and mix of regulatory capital requirements that can maximise the financial performance, stability and efficiency of the selected African banks.
PhD (Accounting and Finance); Department of Accountancy
2022-11-10T00:00:00ZThe determinants of financial flexibility and investment efficiency: some evidence from JSE - Listed and Non - Financial firmsKayiira, Josephhttp://hdl.handle.net/11602/17172022-11-18T12:51:59Z2021-06-23T00:00:00ZThe determinants of financial flexibility and investment efficiency: some evidence from JSE - Listed and Non - Financial firms
Kayiira, Joseph
Making and implementing financing decisions to achieve corporate objectives has been a challenging task for many corporate managers for decades. Achieving and maintaining financial flexibility, investment efficiency and ensuring the availability of funds for investment through payout policies are important financing decisions to maximise shareholder’s value. Financial flexibility is important as it determines the financing, investment and distribution policies of a firm and the firm’s payout policy determine the amount of capital available for investment. On the other hand, investment efficiency is fundamental in making strategic investment decisions as it requires that capital investment should only be allocated to profitable projects. Therefore, it is essential to understand the driving factors of these financial management aspects as there are no studies that have examined the impact of firm specific factors and payout policies on the firm’s financial flexibility and investment efficiency in Africa, including South Africa. To examine these financial management aspects, firstly, the study derived and tested estimation models of financial flexibility and investment efficiency in the context of the South African non-financial firms listed on the JSE Limited. Secondly, the study investigated the impact of selected firm-specific factors on the financial flexibility of the non-financial firms listed on the JSE Limited. It further analysed the impact of selected firm-specific factors on the investment efficiency of the non-financial firms listed on the JSE Limited. Lastly, the study examined the relationship between financial flexibility and investment efficiency of non-financial firms listed on the JSE Limited. A panel of 106 non-financial firms with complete data for periods from 2000 to 2019 was constructed and used in these tests. The research hypotheses were formulated and tested using the appropriate regression models selected from the Random Effect Model (REM), Fixed Effect Model (FEM) and System Generalized Method of Moments (GMM-SYS). The study shows that financial flexibility decreases with an increase in leverage, investment opportunities, payout and finance costs. However, it increases with profitability, cash and cash equivalents and asset tangibility. Based on the study, JSE-listed firms are financially flexible and the determinants of financial flexibility in these firms are leverage, Tobin’s Q, finance cost, dividends, profitability, tangibility and cash and cash equivalents.
The significant factors that determine financial flexibility in the JSE-listed non-financial firms are Tobin’s Q and finance cost as they show a significant correlation with financial flexibility. On the
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other hand, dividends, profitability, tangibility and cash and cash equivalents show an insignificant relationship.
Also, the study shows that investment efficiency in the JSE-listed non-financial firms increases with leverage, payout, growth options, sales growth and cash flow. It, however, decreases with financial flexibility, firm age and size. The main determinants of investment efficiency in these firm are leverage, payout policy, growth options, sales growth, cash and cash equivalents, firm age and firm size.
MCom (Cost Accounting and Management); Department of Accountancy
2021-06-23T00:00:00ZTesting the FAMA and French Five - Factor Model on the JSE - Listed firmsNeluvhalani, Khathutshelohttp://hdl.handle.net/11602/16942022-03-01T22:36:27Z2021-06-23T00:00:00ZTesting the FAMA and French Five - Factor Model on the JSE - Listed firms
Neluvhalani, Khathutshelo
The Capital Asset Pricing Model (CAPM) has its fair share of weaknesses and problems such as its well documented series of unrealistic assumptions. As a response Fama and French (1992) introduced the Fama and French three-factor model (FF3FM), but it remains unpopular among investors, practitioners and academics compared to the CAPM because it is deemed not cost effective and thought of as not being better than the CAPM. In 2015, Fama and French introduced the Fama and French five-factor model (FF5FM) that augmented profitability and investment into their FF3FM. Cakici (2015), Jiao and Lilti (2017), Foye (2018) and others have tested the five-factor model using data from their respective stock markets. The findings of these studies may not necessarily apply to South Africa because of institutional differences between countries. However, South African studies used different testing methods compared to this study. Therefore, given this background, this study sought to test the effectiveness of the FF5FM against the CAPM and the FF3FM in estimating stock returns on the Johannesburg Securities Exchange Limited (JSE Ltd).
This study tested the performance of the FF5FM against the CAPM and the FF3FM using data from the JSE-listed firms. The study sought to find out if the FF5FM performs better than the CAPM and the FF3FM when estimating stock returns of JSE-listed firms. Specifically, this study tested the CAPM, FF3FM and FF5FM using all the JSE-listed firms to determine which model explains better the common variation and the cross section of expected future stock returns. In addition, the study investigated whether the value factor became redundant when the additional factors, profitability and investment were added to the FF3FM as per Fama and French (2015).
Using the bespoke Generalized Method of Moments (GMM) of Hansen (1982) to carry out the regressions with data from the JSE for the period 2003 – 2019, the results show that profitability is a more reliable factor than investment in explaining share returns. The results also show that the FF5FM performs better than the other two models in estimating returns based on the assumption that most holding periods are significantly shorter than 16 years. Furthermore, the test results rejected the hypothesis that the value factor becomes redundant in explaining stock returns when more factors are added to the FF5FM.
MCom (Cost and Management Accounting); Department of Accountancy
2021-06-23T00:00:00ZThe Impact and Determinants of the Qualitative Characteristics on the Usefulness of Financial Reporting: Some Evidence from Selected JSE-Listed FirmsSinthumule, Orifhahttp://hdl.handle.net/11602/16432022-03-01T22:35:46Z2020-05-20T00:00:00ZThe Impact and Determinants of the Qualitative Characteristics on the Usefulness of Financial Reporting: Some Evidence from Selected JSE-Listed Firms
Sinthumule, Orifha
The objective of financial reporting is to provide useful information about, the financial position, financial performance and cash-flow position of an entity, to the users of its financial statements. For countries that have adopted the International Financial Reporting Standards (IFRSs), the International Accounting Standard Board (IASB) has set out the basis on how the financial statements should be prepared and presented. The IASB’s Conceptual Framework provides the principles and guidelines for the developments of the IFRS standards. Through the years, there has been a number of revisions to the conceptual framework that sought to improve the quality of the accounting standards and usefulness of financial reporting. According to the IASB’s Conceptual Framework (2018), for financial statements to be useful, they must possess all the qualitative characteristics of financial reporting. These qualitative characteristics of financial reporting, as outlined in the conceptual framework (2018) are - reliability (faithful representation) and relevance, which are the fundamental qualitative characteristics and the enhancing qualitative characteristics which are - understandability, comparability, verifiability and timeliness. The improvements on the conceptual framework are aimed at improving the usefulness of financial reporting. In South Africa, there are limited studies that have investigated the impact of the qualitative characteristics of financial reporting on the usefulness of financial reporting. The study used data collected from a total of 52 JSE-listed companies operating in the mining, retail and industrial sectors which are listed on the JSE; focusing on the periods 2006, 2012 and 2018 to investigate the impact of the qualitative characteristics of financial reporting on the usefulness of financial reporting. The findings of the study show that all the qualitative characteristics of financial reporting have an impact on the usefulness of financial reporting. Furthermore, the firm size, industry where the firm operated and the leverage of the firm – have an impact on the FEQC of financial reporting.
MCom; Department of Accountancy
2020-05-20T00:00:00Z